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Questions and Answers
How do information systems help in increasing switching costs?
What is an example of a company that uses information systems to allow suppliers more lead time in producing goods?
How does Amazon use information systems to enhance customer loyalty?
Which industry has been severely threatened by the availability of substitutes over the Internet?
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How has the Internet impacted the retail industry?
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What effect has the Internet had on competitive rivalry according to the text?
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What is a key advantage of Internet technology based on universal standards?
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How do smart products impact rivalry among firms?
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What is one effect of smart products on switching costs and new entrants to a market?
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In the context of smart products, what does the Internet of Things (IoT) refer to?
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How do smart products impact the power of suppliers?
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What does the Business Value Chain Model emphasize in terms of competitive strategies?
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Study Notes
Strengthening Customer and Supplier Intimacy
- Information systems can develop strong ties and loyalty with customers and suppliers by increasing switching costs
- Examples of firms that use information systems to facilitate direct access by suppliers include Toyota, Ford, and other automobile manufacturers
- Amazon uses information systems to keep track of user preferences and recommend titles purchased by others to its customers
The Internet's Impact on Competitive Advantage
- The Internet has transformed or threatened various industries, including travel agency, printed encyclopedia, media, retail, music, book, retail brokerage, software, telecommunications, and newspaper industries
- The Internet has increased competitive rivalry, making it easy for rivals to compete on price alone and for new competitors to enter the market
- Profits have been dampened due to the Internet, but it has also created new markets and opportunities for building brands with loyal customer bases
Smart Products and the Internet of Things
- The Internet of Things (IoT) involves the growing use of Internet-connected sensors in products
- Smart products offer new functionality, reliability, and intense use of products while providing detailed information that can improve products and customer experience
- Examples of smart products include fitness equipment and health trackers
- Smart products expand opportunities for product and service differentiation, increasing rivalry among firms
- They raise switching costs and inhibit new entrants to a market, and may decrease the power of suppliers of physical components
The Business Value Chain Model
- The value chain model highlights activities in a business where competitive strategies can be applied and where information systems have a strategic impact
- It identifies specific, critical leverage points where competitive strategies can be applied
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Description
Explore how information systems can be used to strengthen ties and loyalty with customers and suppliers, increase switching costs, and create strong linkages. Learn from examples like Toyota and Amazon.
